Sunday, April 18, 2010

CEO Report Card: How Much of the Goldman Sachs Kool-Aid Did PG&E's Peter Darbee Drink?

Five years is a long time on Wall Street. It's a long time at PG&E. Peter Darbee has been CEO of PG&E Corporation since 2005. He was an investment banker at Goldman Sachs from 1989 to 1994.

It's said that you can take the individual out of "Goldmine Sachs" but you can't take "Goldmine Sachs" out of the individual.

And in the several days since the SEC launched its historic civil fraud action against Goldman, it's been difficult to ignore some commonality between two tone-deaf CEOs having a difficult time keeping their companies out of the ditch.

Each has an odd, mildly blasphemous way of mixing divine guidance with his pursuit of Mammon. A profile in the Sunday Times of Goldman's CEO, Lloyd Blankfein, 55, put it bluntly:

An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker "doing God’s work."

The British newspaper characterized Goldman Sachs as a cultish teamwork environment with insecurity hardwired into the system. "There is a deep and constant paranoia about everything we do," one senior manager approvingly said. What drives this process?

One former Goldman banker describes the culture as "completely money-obsessed. I was like a donkey driven forward by the biggest, juiciest carrot I could imagine. Money is the way you define your success. There’s always room — need — for more. If you are not getting a bigger house or a bigger boat, you’re falling behind. It’s an addiction."

The 56-year old Darbee, more than a decade out of Goldman at the time, struck a tone of piety in his inaugural interview as PG&E's CEO in 2005, telling the San Francisco Chronicle that "It's the Ten Commandments that drive my world view."

"You don't lie. You don't cheat. You don't steal. You don't commit adultery ... If you don't have the right set of values in place, you're not going to get anywhere."

Darbee has an awkward and conflicted attitude regarding his own compensation.

On the one hand, as reported here and here, he massaged PG&E's internal system to produce a $10.6 million gusher for himself in 2009 -- that's 74% above the median for large utility CEOs measured in the Wall Street Journal's annual compensation survey. And 8% above Blankfein's 2009 take!

"I think it’s fair to say that some earlier administrations here at the company really focused on “let’s make money”. We found that approach didn’t inspire employees, it didn’t cause people to admire and respect the company as much, and it didn’t help PG&E attract new employees."

"I think the clear message is you want more from management and more from your leaders in terms of identifying the vision for the company."

As the newspaper account put it, "Turning things around, he said, hinges on restoring a sense of integrity within the company and, in turn, winning back the trust of customers."

In words that may ring particularly loudly for Darbee in today's Proposition 16 context, the Chronicle reported:

In his speech to employees, he said he wants PG&E to "eliminate the term 'ratepayer' from our vocabulary." Instead, he wants workers to always say "customer."

"A customer is someone that we have to go out and ... win day in and day out," Darbee explained. "A ratepayer suggests someone who is the prisoner of a regulated utility."

What to make of these remarks from the sole sponsor of a $35 million propaganda campaign carefully designed to intentionally mislead said "customers" into building an even higher wall around their captivity? Not to mention that, to date, his cynical defiling of the California initiative process has been denounced by every newspaper editorial board to address Proposition 16.

In Darbee's own words from that prescient 2005 interview:

"It's going to be a big job," he acknowledged. "But over a period of three years, five at the latest, my objective is for the customers of this state to say, 'Wow!'"

About Me

I was dumbstruck when I read that PG&E's board has authorized spending up to $35 million on this initiative. The local governments, municipal utilities, and irrigation districts who are its targets are prohibited by law from spending anything to oppose it.
California's investor-owned utilities face a Himalayan task in modernizing our electricity system and building the infrastructure necessary to serve a growing economy. They ought to focus on that, rather than manipulating the electorate to kneecap their few competitors. Has there ever been a time when we needed greater downward pressure on electricity rates?
Perhaps I can contribute to stopping this outrage by assembling this information. Won't you help by using email or the "Share" button above to disseminate each post as broadly as possible?